Gregoire: State will consider liquor privatization

Gov. Chris Gregoire on Wednesday signed a bill that allows the state to seek and examine private sector bids to take over its liquor distribution system.

Gregoire

Costco, which is pushing it’s own plan to completely privatize the distribution and sales of spirits, had been aggressively lobbying Gregoire to veto all or part of Senate Bill 5942. Under S.B. 5942, the state would still maintain control of liquor sales but would sell a distribution lease agreement if the Liquor Control Board decide to accept a bid.

“The bill commits Washington state to nothing,” said Gregoire, adding she received a letter from the four legislative caucuses urging her to sign the bill as is.

The Liquor Control Board runs the distribution system now. There’s a single distribution center in Seattle with 86 employees. It handles all incoming liquor products sold in stores, distributes products to the 373 state, contract, military and tribal stores. The center distributes about 4.7 million cases a year (that’s 18,000 cases a day).The state Auditor estimates the distribution building and equipment is worth $33 million.

The law Gregoire signed includes an emergency clause that Costco and other retail interests objected to. It lets the state immediately begin the 120-day process of sending out and analyzing bids. Costco worries that process could affect its plans to offer a citizen initiative in the fall. Last November, voters rejected two initiatives that would’ve removed state control of liquor. One, Initiative 1100, was the Costco measure. The retail giant contributed more than $3 million in an unsuccessful effort to pass it. Critics said Costco and others would getting a valuable business and the state was essentially getting nothing in return.

In attempt to assuage naysayers, Costco’s new privatization idea includes a requirement that private stores pay 17 percent of liquor sales back to the state and pay big fees as well.

Joe Gilliam, president of the Northwest Grocery Association, said in a statement that S.B. 5942 “would simply trade a state monopoly on liquor distribution for a private monopoly held by a single company. It also would keep the state-owned liquor store monopoly in place.This approach would result in less revenue for the state than the current system and provide no benefits to Washington consumers or taxpayers.”

Washington is one of 18 “control states,” places where the government runs the sale and distribution of liquor. The Evergreen State has had this system since 1933, and officials say it results in lower per-capita alcohol consumption and a reliable stream of tax revenue for government. But some see privatization as a way to potentially bring in more revenue to state coffers, however others say the myriad proposals don’t add up and could be a bad deal for taxpayers.